Other things the same, as the maturity of a bond becomes longer, the bond will pay
A)a lower interest rate because it has less risk.
B)a lower interest rate because it has more risk.
C)a higher interest rate because it has more risk.
D)the same interest rate, because there is no relationship between term and risk.

Question

Quizplus · Accepted Answer

Longer maturity bonds typically pay a higher interest rate because they are considered to have more risk, including interest rate risk and potentially credit risk, over a longer period.

Other Things the Same, as the Maturity of a Bond